In these uncertain financial times, it is important to teach your teenage children how to manage money. You are a role model for your teenager to learn budgeting techniques and now is the perfect time to show him how to manage his finances.
There is no need to tell your teenager every detail of your family finances, however he should not take for granted that he is well provided for. It is essential that he becomes aware of the need to manage his own money responsibly.
Ask your teenager to prepare a written budget. This budget should be for a period of three months and should take into account the cost of the season’s clothing for those months. The teenager should also include irregular spending such as purchasing Birthday gifts and visits to the cinema or similar entertainments. Everyday spending, such as fast-food on the way home from school, also needs to be budgeted for.
Once your teenager has written a budget, it is time to sit down with him and negotiate. Does his pocket money cover his expenses? Are you giving him enough money? Has he been realistic in his assessment of his needs? If he feels he needs more money, where can he cut down his expenses? It is important to have a written budget to refer to, as teenagers tend to impulse buy and not consider how far the money needs to go.
You need to be firm and not give extra money to your teenager when he makes mistakes. If he buys one pair of designer jeans, instead of two or three pairs from a department store, then he must be prepared to wear the one pair of jeans everywhere he needs to wear jeans. Your teenager will quickly learn to manage his clothing account and be more careful when he prepares his next three months budget.
The Part-time Job
Teenagers should experience the financial benefit of having a part-time job. You may need to renegotiate with your teenager how much pocket money you are now prepared to pay him. If you decide to reduce your working teenager’s pocket money give him a clear explanation, so that he understands why he is receiving less pocket money. One reason, for example, may be that he uses the family car to drive to work, thus increasing your fuel costs.
Allow your teenager to enjoy the advantages of earning his own money. He should be able to purchase the occasional extra treat or spend more on his clothing and entertainment.
You might consider suggesting to your teenager that he makes a small donation to charity. In these hard financial times such a donation would really be appreciated by the charity, and your teenager would learn that part of managing money is to share with those less fortunate.
Saving money and Investing
Once your teenager has a regular income, you may wish to encourage him to save towards a future goal, such as purchasing his own car. Teenagers are more likely to save if they have an obtainable goal.
Due to the volatility of the share market, it is actually a good time for your teenager to purchase a few shares. Shares will eventually bounce back and a young investor may find they have made a very nice profit if they have the patience to wait.
You have now taught your teenager to adhere to a written budget and he will manage his money much more effectively. Remember teenagers learn best by example, so if you have never prepared a written budget for yourself, now would be an excellent time to start. It is never too late to learn how to manage money and your whole family will benefit, not just your teenager.